On January 26, Oprah did an entire show on the subject of happiness – how to find it, how happy you really are, how to increase it – and one of the final topics she touched on was happiness as it relates to money. Believe it or not, a 2010 study released by Princeton University’s Woodrow Wilson School claims that making $75,000 a year is a benchmark of happiness. According to the study, when people make less than $75K a year, they’re more prone to unhappiness, but earning more than that amount does not increase a person’s happiness.
I should note that according to the study, there are two types of happiness: a day-to-day happiness (whether you feel happy or sad in the morning), and an overall satisfaction about your life (long-term happiness.) While no amount of money can make the day-to-day perfect, it’s apparently the overall satisfaction that’s impacted by this magical $75,000 number.
The study polled 450,000 Americans about their happiness, and 85% said they felt happy every day, regardless of their income. Making less money did not directly make people depressed, but respondents who earned a smaller income were more stressed by the problems they faced – causing their decreased happiness. But, once a person makes more than $75,000 a year, it appears that money doesn’t necessarily increase their contentment.
I should mention that this $75K salary is not for one person – it’s for a family of four. To put it in perspective, the federal poverty level for a family of four is $22,050. This really got me thinking: As a person who does not make $75K a year individually, but lives in a household that does reach that benchmark, I’m not sure I buy this study. While my husband and I make enough money to support ourselves, live in a comfortable apartment in New York City, go out to eat a few times a week, and make a random splurge here and there, overall I’d say that we’re happy – for a couple with no children to support.
But if we had one child, let alone two, I’m not sure I’d feel so comforted by that same $75,000. One of the biggest reasons I’m reluctant to have a child is because I don’t feel financially prepared to harbor that responsibility. We live in Manhattan, one of the country’s most expensive areas to inhabit. With the average New York City apartment costing $1.4 million in 2010, according to a Prudential Douglas Elliman housing report, and the average rental for a one-bedroom in Manhattan priced between $1,523 in Harlem to $4,687 for a doorman building in SoHo, according to The Real Estate Group NY, living in the city isn’t for the modest (let alone indigent) mouse.
If you follow a rule of thumb that your rent should be one-third of your monthly salary, then $75K barely makes Manhattan living affordable. A $75,000 annual salary works out to $6,250 a month, which means that $2,083 a month can be budgeted for rent. Then subtract food for a family of four, transportation ($104 a month per adult for a Metrocard) and I’d say you’ll be lucky to put clothes on your kid’s back at $75K a year.
True, using Manhattan as an example is being rather specific, but other major cities including San Francisco, Los Angeles, Boston, Chicago, and Miami wouldn’t be much different. Keeping that in mind, I’m still hyperventilating at the thought of only making $75K to support my imaginary family of four.
The point is I’m not sure there can be such thing as a “benchmark figure” of monetary value to pinpoint happiness. Someone may read this post and think, “All I need is a few bucks in my pocket, the freedom to travel at will, and the ability to fund a trip anywhere in the world.” Others may be perfectly content with their steady income of x-amount of dollars. Everyone’s priorities and expenses are different, and what makes someone happy certainly doesn’t make his or her neighbor content.
It goes without saying that no amount of money can ever buy happiness. In recent years, we’ve seen plenty of stories about the pathetic demise of the rich, from Bernie Madoff to Charlie Sheen to Mel Gibson to Lindsay Lohan, and I’m always fascinated by stories about mega-million-dollar lottery winners torn to pieces by their instant wealth. Sure, it’s a good idea to have some money in the bank and financial security. (After all, that’s what Oprah disciple and personal finance expert Suze Orman always preaches; she makes way more than $75K a year, and yet seems quite happy.) But happiness and money come down to what each individual personally expects for his or herself. The one thing I do know is that no study about annual income will ever put my mind at ease about my own personal happiness, no matter what the number. That’s for me to decide.